Medicare

To save administrative costs and promote uniformity, the Health Care Financing Administration (HCFA) has been encouraging its Medicare claims-processing contractors to share automated data processing systems. In fiscal year 1991, HCFA paid 85 contractors $1.4 billion to process more than half a billion Medicare claims. This report presents GAO's evaluation of (1) HCFA's implementation of this policy and (2) the policy's impact on Medicare claims processing. GAO summarized this report in testimony before Congress; see: Medicare: Shared Systems Policy Inadequately Planned and Implemented, by Frank Reilly, Director of Human Resources Information Systems Issues, before the Subcommittee on Oversight and Investigations, House Committee on Energy and Commerce. GAO/T-IMTEC-92-11, Mar. 18, 1992 (seven pages).

GAO found that: (1) in 1992, Medicare claims processing contractors reduced the number of ADP systems processing claims from 58 to 22; (2) HCFA was not adequately prepared to implement the policy change and provided limited oversight during implementation; (3) HCFA did not establish minimum automation requirements to ensure that contractors would process claims efficiently and accurately until 2 years after implementing the policy; (4) since HCFA did not evaluate individual contractor systems to identify the most appropriate systems for sharing, contractors stopped using their own systems and began using other systems that may have been less effective; (5) many contractors experienced claims processing disruptions and reduced productivity during conversion to shared ADP systems, and only 20 of the 55 contractors in a shared maintenance or processing arrangement indicated that they were very satisfied with their shared systems and that operational efficiency had improved; (6) HCFA is considering requiring additional shared system policy changes, even though it has not performed a comprehensive cost-benefit analysis on the impact of its current shared system policy; (7) although HCFA believes that maintaining fewer systems and processing centers can reduce costs and promote uniformity, it has not considered the effect that conversion may have on contractors' ability to ensure accurate Medicare payments; and (8) although HCFA will spend $39.6 million through fiscal year 1992 in implementing the shared system initiative, it has not documented or communicated any long-term system plans.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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